I tried in accordance with the recent economic data painted and the “market consensus” completely different picture. I think that the current economic recovery is not sustainable, and is likely to occur in 2012, another round bottom.
U.S. home prices are likely to fall 30%
Consumption has risen once again to rely on the U.S. economy, its growth is more dependent decline in the savings rate, rather than income growth.
Data mask the truth of economic weakness. Jump up with the budget deficit compared to the growth of income is minimal. U.S. household sector net worth has been sacrificed about 10 trillion dollars, the recent market rally to prevent its further decline.
home residents suffering redemption data performance, 2009, the U.S. National foreclosure rate highest in history -280 million. Although prices have dropped by 30%, but compared to the U.S. GDP and the average wage, the U.S. prices are still high. U.S. home prices are likely to fall 30%. All this does not occur simply because the Fed has maintained zero interest rate policy, while the country through the acquisition of one-tenth of the total mortgage, lower mortgage rates.
This is essentially equivalent to rely on policy instruments to prevent the resurgence or the normalization of the vicious. The question is whether this change in long-term trend – I suspect not work. To do so may result is inflation, and higher wages to catch up with rising property prices. The next question is whether the Fed will only increase inflation, but not cause for panic, leading to another crisis.
The United States to maintain low interest rates was a mistake
In the first quarter GDP of East Asian economies are showing strong growth: South Korea GDP increased from 7.8% last year, an increase of 7.2% in Singapore, Australia, the growth rate also reached 2.7%, U.S. GDP growth is achieved by two number. Almost all economies, will recover its growth due to the growth of U.S. consumption and U.S. investment-led export growth.
The only difference is the past, the U.S. investment portfolio, real estate spending far more than infrastructure spending. This makes the economy more vulnerable. Local governments are still very concerned about the staying power of economic recovery, were very reluctant to raise interest rates already very low.
Although inflation appears to have accelerated throughout the supercharger, but most governments would like to emphasize that inflation is still low. I have repeatedly pointed out that such thinking is wrong. United States to maintain interest rates so low is a mistake, the future will pay a price for.
Britain’s debt crisis or unexpected to
Australia may be the only introduction of the correct monetary policies. The central bank raised policy interest rates to 4.5%. This is a forward-looking approach. Australia’s unemployment rate is higher than the U.S., economic growth is only a quarter of the United States, but the two countries, a considerable inflationary pressure. However, Australia’s rate is twice as high.
Europe, the news is still negative. Greece’s debt crisis than the more serious is the UK’s economic weakness. Britain’s deficit has exceeded 10% of its GDP. Britain has not benefited from the recovery of global trade because of the global financial prosperous period, the United Kingdom industry as a whole has been “hollowed out” the.
Not only that, as a global financial bubble in the center, United Kingdom created a massive real estate bubble. As the foam to reduce the UK economy depends on keeping the government deficit. However, the future is not a place of government to support the economy “productivity revolution.” Not rule out Britain Greece may be the same as the debt crisis.
Trying to reproduce the high-growth stimulation, only lead to inflation. Once inflation led to panic, there will be rapid contraction, giving rise to another crisis. 2012, perhaps it will come.
Tags: economic recovery, home loans, low interest rates, maintain